How to Calculate State Income Tax

Figuring out your taxes can be very complicated.

If your employer does not withhold state taxes from your paycheck, you can get a nasty shock come tax day if you are not prepared. Each state assesses an income tax based on its own needs, and these methods can vary widely from state to state. However, most states fall into one of two categories: the progressive tax or the flat tax. A progressive tax taxes people by their income levels, while a flat tax requires everyone to pay a particular percentage of their income.

Progressive Tax Calculations

Step 1

Access your state’s tax rates page at, which has a compilation of the basic tax laws and rates for all 50 states. This article considers a person who makes $25,000 per year and is from California, which implemented a progressive tax system.

Step 2

Multiply the maximum amount from the first bracket by the percentage tax rate for the first bracket. In California’s case, the first tax bracket goes up to $7,168 and taxes you at one percent on that. You should multiply $7,168 by 0.01 to get $71.68. Save the number.

Step 3

Subtract the maximum amount from the first bracket from the maximum amount from the second bracket. For California, you would subtract $7,168 from $16,994 to get $9,826. Since California taxes you two percent on any income between $7,168 and $16,994, this subtraction tells you how many dollars will be taxed in the second bracket.

Step 4

Multiply the answer you got in by 0.02 to find your taxed value from the second bracket. In this example, you would multiply $9,826 by 0.02 to get $196.52.

Step 5

Figure out how many dollars you will be taxed on in the third bracket by subtracting the maximum amount from the second bracket from your total income. If you make $25,000 per year, you should subtract $16,994 to get $8,006.

Step 6

Find your taxes from the third income bracket (four percent) by multiplying the number of dollars you made in that bracket (8,006) by 0.04. In this case, your answer should be $320.24.

Step 7

Add up all the taxes that you owe from each bracket. This Californian would add $71.68 from the first bracket, $196.52 from the second, and $320.24 from the third bracket for a total of $588.44.

Calculating Flat Tax

Step 1

Find your state’s tax rate on your state’s treasury website or using’s state tax compilation. A state with a flat tax will have only one tax rate. For example, Michigan’s state tax is set at 4.35 percent for everyone in the state.

Step 2

Apply all the standard and itemized deductions that you are eligible for to find your total taxable income.

Step 3

Multiply your total income by your state’s tax rate. In this case, a person who makes $25,000 in Michigan would simply multiply $25,000 by 0.0435 to get $1,087.5 as the amount of state tax he owes.